ITO 9(2)(2), MUMBAI V. CANDOR INDIA P.LTD, MUMBAI

ITA 98/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8162 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Unexplained cash credit
• Section: 143(3); 147; 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) I.T.A. NO. 98 /MUM/201 6 ( / ASSESSMENT YEA R :2 008 - 09 ) INCOME TAX OFFICE R 9(2)(2), ROOM NO.60A,6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S CANDOR INDIA PVT LTD., SINDHI BUILDING, 15 TH ROAD, KHAR WEST, MUMBAI - 400098 / REVENUE BY : SHRI RAJAT MITTAL / ASSESSEE BY : SHRI MANI JAIN PAN : AADCC3264A / DATE OF HEARING : 2 5 . 10 .2017 / DATE OF PRONOUNCEMENT : 12 .2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER OF THE L D.CIT(A) - 16 , MUMBAI, DATED 20.1 0 .2016 FOR THE ASSESSMENT YEAR 20 08 - 09 WHEREIN THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.2,01,50,000/ - AS MADE BY THE AO U/S 68 OF THE ACT ON ACCOUNT OF NO N VERIFICATION OF IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTIONS. 2. THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09. DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2009 - 10 IT WAS FOUND THAT THE ASSESSEE COMPANY HAS RECEIVED SHARE APPLICATION 2 I.T.A. NO. 98 /MUM/201 6 MONEY AMOUN TING TO RS.2,01,50,000/ - FROM M/S VIDAR ADVISORS INC, BLOCK 3,13 - 171, NORMANTON PARK, SINGAPORE - 119000 DURING THE FINANCIAL YEAR 2007 - 08 RELEVANT TO THE ASSESSMENT YEAR 2008 - 09. DURING THE INVESTIGATION REGARDING ASSESSMENT YEAR 2009 - 10, IT WAS INFORM ED BY THE JOINT SECRETARY (FT AND TR) - II, CBDT, NEW DELHI THAT M/S VIDAR ADVISERS INC. WAS NOT AVAILABLE AT THE GIVEN ADDRESS NOR A SINGAPORE REGISTERED ENTITY AND TAXPAYER . T HEREFORE THE SOURCE OF APPLICATION MONEY OF RS. RS.2,01,50,000/ - WAS N OT PROVED. ACCORDINGLY, THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 WAS REOPENED UNDER SECTION 147 REA D WITH SECTION 148 OF THE ACT BY ISSU ING NOTICE U/S 148 OF THE ACT DATED 27.3.2012. THE AO WAS OF THE OPINION THAT THE ASSESSEE FAILED TO PROV E THE THREE INGREDIENTS REGARDING THE SHARE APPLICATION MONEY I.E. IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS AS ENUMERATED UNDER SECTION 68 OF THE ACT. THE AO ACCORDINGLY ISSUED A SHOW CAUSE NOTICE CALLING UPON THE ASSESSEE TO PRODUCE VARIOUS DOCUMENTS IN ORDER TO PROVE THE TRANSACTIONS BUT THE ASSESSEE DID NOT COMPLY WITH THE SAID NOTICE SO ISSUED BY THE AO. ULTIMATELY, THE AO RECEIVED A LETTER DATED 16.2.2012 FROM INLAND REVENUE AUTHORITIES, SINGAPORE STATING TH AT THE SAID COMPANY IS NOT A SINGAPORE TAXPAYER NOR A SINGAPORE REGISTERED ENTITY. IT WAS ALSO STATED THAT THE REMITTING BANK SITUATED IN USA AND THE BENEFICIARY BANK IN INDIA. AS PER THE AO, THE ASSESSEE WAS CHANGING ITS STAND S . DURING THE ASSESSMEN T PROCEEDINGS, AND 3 I.T.A. NO. 98 /MUM/201 6 VIDE LETTER DATED 9.8.2012, THE ASSESSEE AGAIN CHANGED ITS STAND AND INFORMED THAT VIDE LETTER DATED 9.8.2012 M/S VIDAR ADVISORS INC IS NOT A SINGAPORE BASE COMPANY BUT IT IS BASED IN REPUBLIC OF SEYCHELLES, AND OPERATING FROM SUIT N O.305, CAPITAL CITY BUILDING, VICTORIA, MAHE, SEYCHELLES. THE AO FINALLY CAME TO THE CONCLUSION THAT THE ASSESSEE FAILED TO PROVE THE SOURCE OF INVESTMENT WITHIN THE MEANING OF SECTION 68 AS WELL AS GENUINENESS OF THE TRANSAC TIONS, CREDITWORTHINESS AND IDENTITY OF THE PERSON WHO REMITTED MONEY TO INDIA AND HENCE ADDED THE SAME TO THE TO T AL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT BY FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ASSESSING THE TOTAL INCOME AT RS.2,01,5 0,000/ - . 3 . IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO. IN THE FIRST REMAND REPORT, THE AO SUBMITTED THAT THE SHARE SUBSCRIBER WAS NOT A TAX RESIDENT OF SINGAPORE AND IDENTITY OF THE PERSON WHO HAVE APPLIED FOR T HE SHARES, GENUINENESS AND CREDIT WORTHINESS REMAINED UNVERIFIED. IN THE REJOINDER, THE ASSESSEE SUBMITTED BEFORE THE F IRST A PPELLATE A UTHORITY THAT M/S VIDHAR ADVISORY INC IS NOT A SINGAPORE BASED COMPANY BUT IT WAS A REPUBLIC OF SEYCHELLES, AND OPER ATING FROM SUIT NO.305, CAPITAL CITY BUILDING, VICTORIA, MAHE, SEYCHELLES AND FILED CONFIRMATION LETTER FROM THE COMPANY . T HEREUPON, THE LD.CIT(A) AGAIN CALLED FOR THE REMAND REPORT FROM THE AO WHICH IS REPRODUCED BELOW: 4 I.T.A. NO. 98 /MUM/201 6 ORIGINAL REMAND REPORT REJOIN DER BY ASSESSEE COMMENTS ON REJOINDER THE ASSESSING OFFICER MADE AN ADDITION OF RS.,201,OO,OOO/ - U/S 68 BEING THE SHARE APPLICATION MONEY RECEIVED FROM ML/ VIDAR ADVISORS INC AS THE ASSESSEE COULD NOT PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE SAID PARTY AS THE ADDRESS FURNISHED WERE INCORRECT IN THE ORIGINAL REMAND PROCEEDINGS, NEITHER THE ASSESSEE HAS ATTENDED NOR FILED ANY EXPLANATIONS AND HENCE, THE ORIGINAL REMAND REPORT WAS SUBMITTED, WHICH IS SELF- EXPLANATORY. THE ASSESSE E VIDE LETTER DT. 9.8.2012 SUBMITTED THAT 8 VIDAR ADVISORS LNC IS NOT A SINGAPORE BASED COMPANY BUT IS BASED IN REPUBLIC OF SEYCHELLES AND FROM SUITE NO.305, CAPITAL CITY BUILDING, VICTORIA, MAHE SEYCHELLES. ALSO FILED THE CONFIRMATION AND LETTER FOR TH E SAME FROM THE SAID PARTY. THE ADDITION WAS MADE ON ACCOUNT AS THE ADDRESS MENTIONED IN RESPECT OF THE PARTY IS FOUND TO BE INCORRECT. DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESSEE HAS FILED THE CONFIRMATION, FIRC AND SHARE ALLOTMENT FORM. THE ASSESSEE HAS ALSO SUBMITTED THE CONFIRMATION FRO M/S VIDAR ADVISORS INC CONFIRMING THE ADDRESS OF REPUBLIC OF SEYCHELLES ON WHICH THEIR OFFICE IS LOCATED. THE ASSESSEE BY SUBMITTING THE ABOVE DOCUMENTS HAS TRIED TO SUBSTANTIATE THE TRANSACTION AND ALSO PROVED THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE SHARE APPLICANT. FURTHER DURING THE COURSE OF REMAND PROCEEDINGS, THIS OFFICE HAS RECEIVED LETTER DATED 2.1.2014 FROM M/S VIDAR ADVISORS INC CONFIRMING THE INVESTMENTS MADE IN THE APPE LLANT COMPANY. THE SAID LETTER HAS ALSO MENTIONED THE CURRENT ADDRESS OF M/S VIDAR ADVISORS INC. IN VIEW OF THE CONFIRMATION FROM M/S VIDAR ADVISORS INC, THE APPEAL OF THE ASSESSEE MAY BE DECIDED ON MERIT. IN THE SECOND REMAND REPORT, THE AO HAS GI VEN THE FINDINGS THAT THE TRANSACTIONS WERE DULY VERIFIED AND THE SAID COMPANY WAS REGISTERED AT THE ADDRESS GIVEN BY THE ASSESSEE AND THE NECESSARY CONFIRMATION FROM THE SAID 5 I.T.A. NO. 98 /MUM/201 6 COMPANY WAS ALSO RECEIVED. THE AO HAS ALSO STATED THAT HE HAS RECEIVED THE LET TER DATED 2.1.2014 FROM M/S VIDAR ADVISORS INC CONFIRMING THE INVESTMENT MADE IN THE APPELLATE COMPANY. THE SAID LETTER WAS ALSO BEARING CURRENT ADDRESS OF THE LENDER. THE LD. CIT(A) ON THE BASIS OF THIS REMAND REPORT DELE TED THE ADDITION BY OBSERVING HOLDING AS UNDER : 4.2.5 SINCE DURING THE COURSE OF REMAND PROCEEDINGS , NECESSARY DETAILS ALONG WITH THE DOCUMENTARY EVIDENCES W ERE FILED BY THE ASSESSEE COMPANY BEFORE THE AO AND PROVED THE IDENTIFY AND CREDITWORTHINESS OF THE DEPOSITS , THE GENUINENES S OF TRANSACTIONS WAS ALSO PROVED BY M/S VIDHAR SADVISORY INC. AO HAD NOT POINTED OUT ANY DISCREPANCY IN THE DETAILS FILED BY THE APPELLANT DURING THE REMAND PROCEEDINGS. THEREFORE, T HE ASSESSEE COMPANY HAS DISCHARGED ITS ONUS OF PEEVING TH E CR EDIT - WORT HINESS AND IDENTITY OF THE DEPOSIT ALONG WITH GENUINENESS OF TRANSACTION . HENCE, ADDITION OF RS.,2,01,50,000/ - MADE U/S 68 OF T HE INCOME TAX ACT, IS HERBY DELETED 4 . THE LD. DR WHILE RELYING ON THE ORDER OF THE AO ARGUED THAT THE ORDER PASSED BY THE LD. CIT(A) IS INCORRECT AS THE ADDITION WAS DELETED DESPITE THE INVESTORS IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION MENTIONED IN THE REMAND REPORT WAS UNPROVED IN THE FIRST REMAND REPORT. THE LD. DR SUBMITTED THAT DESPITE ADEQUATE OPPO RTUNITIES GRANTED TO THE ASSESSEE , THE GENUINENESS OF TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE M/S VIDHAR ADVISORS INC WAS NOT PROVED. HE, THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED . ON THE OTHER HA ND, THE LD.AR HEAVILY RELIED ON THE ORDER OF LD CIT(A) AND SUBMITTED THAT THE AO IN THE SECOND REMA ND REPORT HAS AMPLY AND UNEQUIVOCALLY PROVED AND 6 I.T.A. NO. 98 /MUM/201 6 CONFIRMED THE SOURCE I NVESTMENT OF RS.2,01,50,000/ - FROM M/S VIDHAR ADVISORY INC VIDE LETTER DATED 0 2. 01. 201 4 EXISTING AT THE ADDRESS GIVEN BY T HE AS S ES S EE TO THE AO AND DULY VERI F IED IN THE SECOND REMAND R EPORT BY THE AO . THE LD. AR FURTHER POIN T ED OUT THE AO HAS CLEARLY OBSERVED THAT THE TRANSACTION IS DULY CONFIRMED . IN VIEW OF THE FACTS, THE LD.AR PR AYED THAT THE ORDER PASSED BY THE LD.CIT(A) IS QUITE REASONABLE AND BASED UPON THE REMAND REPORT OF THE AO WHICH CONFIRMED TH A T THE TRAN S ACTION IS GENUINE AND IDENTITY AND CREDITWORTHINESS OF THE LENDER/INVESTOR HAVE DULY BEEN PROVED. 5. A FTER HEARIN G THE RIVAL PARTIES AND ON GOING THROUGH THE MATERIAL AVAILABLE BEFORE US AND ALSO ON PERUSAL OF THE REMAND REPORT , WE FIND THAT THE AO AFTER EXAMINING THE CONFIRMATION FROM THE SAID PARTY , SHARE ALLOTMENT FORM S AND OTHER RELEVANT EVIDENCES GAVE A FINDIN G IN THE REMAND REPORT THAT ALL THE THREE MAIN INGREDIENTS I.E IDENTITY , CREDITWORTHINESS AND GENUINENESS AS ENVISAGED BY SECTION 68 OF THE ACT WERE SATISFIED. THE INVESTOR WHO INVESTED THE MONEY IN THE ASSESSEE COMPANY WAS FOUND ON THE NEW ADDRESS A S PROVIDED BY THE ASSESSEE. IN VIEW OF THE SAID FACTS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS TAKEN A VERY REASONABLE AND CORRECT VIE W IN THE MAT T ER. HAVING CONSIDERED THE FACTS OF THE CASE AND REMAND REPORTS OF THE AO , T HERE IS NO REASON TO DISAG REE WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) . WE ARE THEREFORE INCLINED TO UPHOLD THE ORDER OF THE LD.CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 7 I.T.A. NO. 98 /MUM/201 6 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST DEC , 2017 . S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 21 . 1 2 . 2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI